CARSON CITY – Carson City District Judge James Wilson heard arguments today but delayed ruling on whether an initiative petition filed by the state teachers association to raise an estimated $800 million a year for education via a new margin tax is too flawed to go forward.

Wilson said after a brief hearing that he will issue a decision “as soon as possible.”

Attorney Josh Hicks, representing the Committee to Protect Nevada Jobs, argued that the petition filed with the Secretary of State’s office by the Nevada State Education Association violated a rule for such measures requiring they deal with a single subject.

He also argued that the 200-word description of effect for the complex 26-page proposed margin tax on larger Nevada businesses was misleading. Nevada residents who would be asked to sign the petition to take the proposal to the Legislature in 2013 need to know what the measure would do, Hicks said.

Carson City District Judge James Wilson.

The description of effect does not, for example, include mention that the names of the businesses paying the tax, and the amount they would pay, would have to be published on a website by the Department of Taxation for the public to review, a change to current confidentiality statutes, he said.

This provision generated a number of questions from Wilson directed to James Penrose, the attorney defending the petition on behalf of the teachers association.

Hicks also argued that the proposal violates a constitutional requirement that it provide enough revenue to pay for its implementation. A fiscal note for the proposal indicates that not enough money has been identified to pay for the costs to the Tax Department to implement the new levy, he said.

Hicks questioned whether what the teachers association calls the “Education Initiative” is misleading because there is no guarantee that funding for public education would increase if it became law.

Penrose argued that the petition is straight forward, seeking to impose a new tax to raise money for public education. It would levy a 2 percent tax on companies making gross revenues in excess of $1 million a year. The money would be deposited in the Distributive School Account to fund public education, he said.

Penrose said the description of effect does not have to be perfect, but has to give those who might sign the petition a clear idea of its intent, which the proposal does.

Lynn Warne, president of the NSEA, said after the hearing that the group has yet to begin gathering signatures to qualify the measure to take to the Legislature. The group has until Nov. 13 to collect can collect 72,352 signatures to take the measure to lawmakers. The Legislature would then have 40 days to approve the proposal or it would go to the voters in 2014.

Warne said the association will wait until Wilson’s ruling to decide whether to begin collecting the needed signatures, even though any decision could be appealed to the Nevada Supreme Court.

If elements of the petition are rejected by Wilson, the petition can be revised and re-filed so that the signature gathering effort can begin, she said.

Gary Peck, executive director of the association, said the group expects its effort to be successful.

“I think it would be fair to say that we remain confident that, at the end of the day, the initiative will withstand a legal challenge,” he said. “We remain confident that it will qualify because the residents of the state of Nevada understand how inadequate the funding for K-12 education is, and they will be persuaded that this is a way to fix the problem.”

Hicks said he could not predict what Wilson’s ruling will say.

“The judge gave it a full, fair hearing and that’s all anyone can ask for,” he said.

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Audio clip:

Gary Peck, executive director of the teachers association, says the effort to impose the tax will be successful and supported by Nevada residents: